2011 The Risk Of Stagflation Will Puzzle The Economic &Nbsp; The Proportion Of M2 And GDP Will Be Higher.

In 2011, the liquidity environment faced by A shares is still "hot inside", and how to stabilize economic growth under high inflation pressure has become a problem. Stagflation risk will perplex economic decisions.

Under the pressure of high inflation, the downside risk of the market is greater than that of the uplink. It may appear "V" in the whole year, but there is still uncertainty on the right side.

In addition, a year and a half of the valuation of small and medium-sized shares will gradually converge.

Recovery gap narrowing

In 2010, the United States increased employment, the European sovereign debt crisis, and emerging economies harnessing inflation.

This resurgence inconsistency and the resulting policy choices are the biggest characteristics of the global economy in the 2010 and the most important macro background of asset price movements in large categories.

Under the positive influence of low base number, replenishment stock and QE1, the bottom of the US economy is established, but with the disappearance of these drives, the positive cycle of employment, consumption, price rise, corporate profit capital expenditure and credit recovery is unable to be activated.

We believe that the re employment will be a lengthy process under the constraints of knowledge and ability. The simultaneous increase of unemployment and vacancies indicates that the problem of structural unemployment is serious, so it is very difficult for the unemployment rate to drop sharply in the short term.

But at the same time, we also see that although the recovery is not strong enough, the US economy is still recovering.

The newly released Chicago PMI hit a new high of more than 20 years, making most of the contribution to new orders and payment prices. Employment data also improved for three consecutive months, reaching the best level in more than 5 years.

Therefore, the US in 2011 is likely to be a loose monetary policy but a solid economic recovery.

The biggest difficulty in the euro area is

More importantly, although the current 750 billion overall relief plan can meet the temporary financing needs of Ireland and other countries, this does not mean that it can rest for no time. The reason is that the debt burden of Italy and Spain, which is the third and fourth largest economies in the euro area, are also very heavy.

Italy government debt accounts for more than 100% of GDP, of which external financing is more than 1 trillion euros. In the next few years, the interest burden alone will account for more than 4% of the GDP share. In the next three years, the Spanish government needs to meet the financing needs of the budget deficit and debt maturity to reach 350 billion euros.

Predictably, the sovereign debt crisis in Europe will still be repeated in 2011.

Contrary to the US and Europe, the trouble for emerging economies is to control inflation and achieve a soft landing.

rising

We expect that the fundamentals of emerging market countries in 2011 are still stronger than those of developed countries such as the US and Europe. The important feature of the recovery and differentiation of developed and emerging economies will continue.

However, it is noteworthy that the gap between the two sides is narrowing. The developed economies are slow but on the road to recovery. Relatively speaking, the fundamentals of the United States are healthier, while emerging economies want to ease the pressure on inflation and capital inflows through the economic slowdown, and the growth rate will slow down.

Next year inflation is stronger than tiger {page_break}.

Real estate prices rose sharply in early 2010, CPI and the second half of the year.

Counting the current round of inflation, the United States once again quantitative easing is the biggest external factor.

Against the backdrop of global disintegration, the developed economies continue to release currencies represented by the United States, and the US dollar as a "new" interest trading tool runs across all kinds of assets.

The global economy has apparently not recovered to pre crisis levels, while gold, copper and other commodity prices have reached a new high, which fully shows that liquidity is the main driving force rather than actual production demand, and the pressure of imported inflation may be greater in 2011.

But the fundamental reason is the excessive domestic currency.

In 1996, the ratio of M2 to nominal GDP was a turning point. This year the ratio between the two was 1. After that, it rose to 2003 and remained above 1.5. During the subprime crisis, we also participated in the "Keynes competition". In 2009, the new credit reached 9 trillion and 600 billion, and the ratio of M2 to GDP rose to 1.8.

Up to the third quarter of 2010, China had a broad currency of 69 trillion and 650 billion, and the United States was less than 9 trillion dollars, or less than 60 trillion yuan, but China's GDP was only 1/3 of that of the United States.

Currency is rampant, and China is quite prominent among the world's major economies.

From this factor, inflation is inevitable and long-term.

Another long-term factor is the revaluation of the relative price of resources. The less expensive production factors, especially the labour force, will come into a long-term upward channel as the supply reaches its peak. This is the usual turning point of Lewis.

China's population dependency has declined roughly since 1965, and is expected to reach its bottom in 2015, which has been rising slowly since then. This means that the demographic dividend that has been released for thirty years in the reform and opening up system will gradually enter the stage of population debt.

In the long run, rising domestic labor prices will be the main driver of domestic price increases.

Looking ahead, although CPI has dropped in December, the annual growth rate of CPI will reach more than 4% in 2011, and the monthly growth rate may exceed 7%.

Due to the production cycle and possible climatic factors, the food CPI will continue to be the dominant factor. Meanwhile, the CPI pressure of residential type caused by the rise in real estate rentals can not be ignored.

On the whole, the biggest threat to CPI is that in the first half of the year, when the readings are relatively high, the decline may be very limited in the second half or even continue to rise, which is a test of monetary policy and asset prices.

At the same time, PPI is also facing rising pressure.

Although the domestic power sluice has ended, we are likely to see the slow recovery of the US economy and the continued implementation of quantitative easing. Commodities have begun to be positively related to the US dollar index. The CRB futures price, which has just hit a record high, reminds us that the risk of imported inflation in the first half of this year is greater than that in 2010.

In recent years, the real estate market in some parts of the world has seen the situation of "price volume rising". Wang also frequently refreshed the floor price. Under the circumstances that the absolute price of the longest regulation has not dropped significantly, the possibility of rising price trend will not be completely eliminated even though the regulation and control may be overweight.

The inflation situation is fiercer than the tiger. We must "put the overall level of stable prices in a more prominent position". In 2011, monetary policy shifted from moderate easing to stability.

First, the domestic and foreign prices of RMB funds will continue to rise to a certain extent, with a total of 50 basis points at least two times a year, while the appreciation will probably remain at around 3%, especially at the beginning of this year. Two, it will continue to be quantitative regulation, and there will be no upper limit on the increase of the reserve ratio, which will be timely hedged according to the inflow of foreign capital.

Besides price and total quantity, we think rhythm control is more important.

No matter whether the planned credit is ultimately 7 trillion and 500 billion or how much, it is very important to maintain the rhythm of the year. If the concentration of large scale releases at the beginning of the year is to superimpose the possible rising prices, the inflation pressure will undoubtedly be large enough in the next few months, and more stringent regulation measures must be followed.

2011 investment must be given strength.

The run of inflation and growth is not just a short-term issue - the sharp rise in prices and the rebuilding of the inventory cycle. In the long run, the relationship between the promotion of labor remuneration and the increase of labour productivity also falls into this category.

Looking forward to 2011, consumption has been promising for a long time, but the process has been gradual. The export growth is not pleasantly surprised. On the contrary, high import growth is more likely. The biggest variable in the three Troika is investment, which is related to the rebuilding of the inventory cycle at the moment and the key to the smooth start of the mid cycle prosperity in the long run.

From a small cycle, it seems inevitable that prices will remain high in the short term, and that inventory rebuilding will be too difficult.

In December, the decline of PMI exceeded seasonal factors, which was affected by policy regulation, and domestic demand declined.

Looking ahead, urban congestion and real estate regulation make it difficult to reproduce the high growth rate of durable goods in the past two years, and the explosive force of food, clothing and even electronics and other consumer goods obviously can not be supported. The consumption of durable goods and real estate investment has dropped, and the biggest change of economic growth in 2011 has fallen on other industries.

Over the past five years, the contribution rate of the second industry to GDP has been stabilized by about 50%. The contribution rate of the second industry in 2009 has been as high as 52%. However, the contribution rate of the industry has declined, and the government led construction industry has taken the counter cyclical control role. The added value has increased significantly from 18.6% in 2008 to 18.6%. In 11th Five-Year, the proportion of third industries in the national economy has also increased significantly, but this is mainly attributable to the rapid development of real estate and finance.

Starting from 2011, we expect that the three major industries will have the following characteristics during the "12th Five-Year" period: first, food production and prices have aroused great social concern. The rise in food CPI will trigger the country's investment in the primary industry, and its growth rate will increase from 2009 to 20% to 40%.

Secondly, the investment in construction industry in the second industry will slow down. The investment in manufacturing industry will be divided. The growth rate of investment will be maintained on behalf of the direction of industrial upgrading, machinery and equipment, communication equipment, instrumentation, environmental protection, solid waste treatment and electrical equipment encouraged by the national policy. Although the task of energy saving and emission reduction is no longer urgent, the investment of high polluting and high energy consuming industries, such as colored, steel and cement industries, is still low.

Finally, the third industry is facing the challenge of "de real estate".

Real estate investment accounts for about 25% of the total investment, accounting for more than 40% of the third industry investment.

This year, we plan to build 10 million affordable housing, which is equivalent to 80% of the commercial housing scale in 2009. Therefore, the plan is either discounted or completely completed due to the funding gap, but it has a more serious "crowding out effect".

In any case, the third industry needs to find a breakthrough from other industries.

We believe that the proportion of investment in water conservancy, geological exploration, logistics and pportation, information pmission, computer services and software will increase significantly.

A shares dull looking for stage opportunities {page_break}

For most of 2010, the market continued to be characterized by the second half of 2009: it was severely fragmented.

The cyclical large cap stocks are light and bright, and small cap stocks in emerging industries continue to grow stronger.

The former is the inevitability of economic growth and normalization of monetary policy. The latter is the layout and good expectation of China's economic pformation.

In 2011, the pattern of the world economy will continue to differentiate. The sustained release of liquidity from overseas economies and the broader inflation situation in China may be even more severe, which determines that China's monetary policy has a very limited space.

The return of liquidity to normal or even tighter is a foregone conclusion. With the end of the dollar market as a symbol, the internal and external driving force of valuation changes has been exhausted in the short and medium term.

The current Shanghai and Shenzhen 300 index is valued at 15 times, the S & P 500 index is 14 times, and the India Sensex30 index is 18.5 times. The estimated value of the core index in 2011 is stable at 15-18 times.

Performance instead of liquidity has become the dominant force.

Data show that finance, petroleum, petrochemical, coal and real estate accounted for more than 70% of the profits of the four sectors of the market. Under the background of steady return of monetary stability and economic growth, the overall growth of A shares will remain at 15%-20%.

The valuation is 15-18 times, and the growth is 15%-20%, which means that even if the index goes up, the upper limit is also hard to break through 3500 points.

On the contrary, in the first half of the year, high prices in general and strong recovery in the economy may coexist. Inflation and economic combination are stagflation. Neither valuation nor profit growth can provide strong support for the market.

The whole year looks like the "V" shape. In the first half of the year, the market faced huge downward pressure, and there was uncertainty on the right side and the rise.

Rhythm, affected by the rise in commodity prices, the market may have "resource share market" before the Spring Festival, and coal and nonferrous metals can be concerned. Then, there is concern about stagflation, the pressure of market callbacks increases, and large cap stocks fall slightly and small cap stocks fall sharply. Thereafter, whether the policy will relax or not will depend on inflation and downgrade. If the smooth market will usher in a wave of rebound, real estate stocks and other strong cyclical sectors deserve attention, but if inflation is slow and the policy is constrained, the market will continue to search for the bottom.

We believe that a year and a half of the stock market has been difficult to continue and will face adjustment and differentiation in the future.

At present, the valuation of small and medium board and GEM stocks is 50 times and 80 times respectively, while the growth rate is expected to be 35% and 40% respectively.

It is true that for small cap stocks with growing myths, whether such performance and valuation match can not be generalized, but at least we believe that with the economic return to the potential growth level and the steady monetary policy, the overall strength of the small and medium cap stocks has passed, and the huge discrepancy between the stock market and the large cap stocks will converge.

It is estimated that in the future, small and medium-sized listed companies with definite performance and high growth will have the characteristics of "attached stock". Because of the huge stock, the growth of the industry will be large and clear.

A typical example is the concept of "industrial production service", that is, the "emerging" business, which is created for the service of traditional industrial production, such as solid waste treatment, waste heat collection and gas supply and pportation.

The rest of the opportunities include: some normalization of energy saving and emission reduction measures to narrow the surplus capacity of some cyclical industries, such as cement and so on; the relaxation of policy intermittently, the upward revision of the discount of real estate stocks, the trading opportunities of their stocks, the opportunities brought by the deterministic integration and growth of aerospace industry, and the B-share opportunities brought by the international board.